India gold traded flat on Tuesday afternoon as support from firm overseas leads was offset by a strong rupee, though buying remained weak as traders awaited an at least a 1 percent fall in prices, dealers said.

The most-active gold contract for April delivery on the Multi Commodity Exchange of India was trading 0.09 percent higher at 20,389 rupees per 10 grams at 1:44 p.m.

There are nominal sales, they are waiting for prices to fall below $1,350 (an ounce), said a dealer with a state-run bullion importing bank.

International spot gold inched higher after China's weaker-than-expected inflation data eased fears of more aggressive tightening moves, while persistent concerns about rising prices are expected to buoy gold in the longer term.

The Indian rupee climbed to its strongest in nearly a week, supported by broad losses in the dollar versus major currencies. The rupee plays an important role in determining the landed cost of the yellow metal quoted in dollars.

Dealers said supply constraints, due to excessive snowing in refining areas and lower carry-over stocks, have eased, pressuring premiums on the downside.

There has been improvement in supplies, and even the premiums have come down to $1.5 (on London prices) from the earlier $3, said the dealer.

Winter harvesting season is underway in India and is expected to leave more disposable income with rural households, which contribute significantly to gold demand. Marriage season has also started and will last through May.

India accounts for 20 percent of global demand for jewellery, making it the world's biggest consumer.

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